About the Coffee Crisis… - Fact Sheet

Fact Sheet

About the Coffee Crisis…

- 25 million coffee producers are facing a crisis in Central And South America, Africa and Asia –
in total, 100 million poor people dependent on the coffee chain are affected.
- The price of coffee has almost halved in the past three years to a 30-year low. The value of coffee exports has fallen by $8 billion in the past five years.
- The big four coffee roasters – Kraft, Procter & Gamble, Nestlé and Sara Lee – each have coffee brands worth $2 billion of more in annual sales. Together with German giant Tchibo, they buy almost half the world’s coffee beans each year.
- Their profit margins are high – Nestlé’s profit margin on instant coffee was estimated at 26% in 1999; Sara Lee’s is estimated at nearly 17%.
- Roasting companies are using more poorer quality coffee beans than ever before thanks to new technologies such as steam cleaning
- The coffee crisis is a stunning failure of governments, companies and institutions such as the World Bank. Meanwhile, poor governments are being forced to bail out farmers and spend less on health and education
- The collapsed coffee price has created a buyers’ market – leaving some of the poorest and most powerless people in the world in an open market with some of the richest and most powerful. The result, unsurprisingly, is that the rich get richer and the poor get poorer.

What Oxfam’s coffee report says…

- The global market is oversupplied by 540m kilograms of coffee each year; 8% more coffee is being produced than consumed.
- Coffee farmers are getting, on average, $1 a kilogram while consumers in rich countries are paying roughly $15 a kilogram – a markup of 1500%. Coffee now costs more to grow and pick than it does to sell.
- Ten years ago, poor countries’ export sales were worth a third of the total coffee market.
Today, it is just 10%.
- Millions of families in four continents who are dependent on coffee are going hungry. They can’t afford school fees for their children or pay for medicines. The first to suffer are women and children. Some farmers are turning to growing coca instead.
- Disaffection and public disorder are growing. Joblessness and economic migration is worsening.
- The benefit of aid and debt relief is being severely undermined as entire country economies are decimated (in some Central American countries coffee income has fallen by 40%; Ethiopia’s coffee income dropped by US$110m compared to the US$58m it is set to save in debt relief this year).
- The value of coffee exports to producer countries has fallen by $8 billion in five years.

Oxfam is calling for a Coffee Rescue Plan to make the coffee market work for the poor as well as the rich. It seeks to:
1. Ensure companies pay farmers a decent price
2. Destroy some surplus stocks to reduce demand and push up prices
3. Commit to global trade in only quality coffee
4. Call for the management of commodity markets to better balance supply and demand, and shared benefits between producers and consumers
5. Target aid packages to farmers to alleviate immediate suffering and to create alternative livelihoods
6. Support producing countries to process commodities

For a briefing regarding the coffee crisis and Oxfam Community Aid Abroad’s campaign, or to arrange an interview, please contact:
Carly Hammond
National Media Coordinator
Oxfam Community Aid Abroad
tel: (61)(3) 9289 9413
mobile: (61) 409 181 454

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